Fiat Currency Definition: A fiat currency refers to a currency issued by a government that is not supported by a physical commodity, such as precious metals. Its value is based on the stability of a government that issues the currency and the supply and demand factor.
Many paper-based currencies are also fiat currencies, which include cash exchanged in central banks, such as U.S. and Canadian dollars, Euros, Yen, Australian dollar, and more. The main fiat currency risk is printing too many bills, which can result in hyperinflation.
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